Standing Committee A

[Mr. Nigel Beard in the Chair]

Tax Credits Bill

Clause 9 - Maximum rate

Amendment moved [this day]: No. 50, in page 6, line 32, at end insert 
'and, 
 (c) an element in respect of any second adult in the benefit unit'.

Nigel Beard: I remind the Committee that with this we are considering amendment No. 31, in page 6, line 40, after 'according', insert
'to the number of adults in the family and'.

Steve Webb: Thank you, Mr. Beard. I cannot help noticing that we have already driven out two Chairmen, and I hope that that does not reflect anything about the quality of the debate.
 Amendment No. 50 would remove a discrimination against two-parent families compared with one-parent families on the same income level. My argument is that the two-parent family on the same income level as the one-parent family has the added burden of an extra mouth to feed, to put it at its simplest. Most of the social security system, such as income support and housing benefit, recognises that fact through an amount for the second adult—it is not the same as that for the first adult, but perhaps a 60 per cent. addition—but tax credits will not do that, and working families tax credit does not currently do it. My question is, why not? 
 I guess that there could be two reasons. One might be about poverty, of which there is a far higher incidence among lone parents. However, we are talking about people on the same income. If there are two families, one with one parent and one with two, both on £150 a week, we cannot argue that we should give more to the one-parent than to the two-parent family because the one-parent family is somehow poorer. Their incomes are the same. 
 The second reason could be an argument of child care, and that the two-parent family has the advantage of ''free'' child care, but that does not really stack up either. First, there is substantial help available in the system with child care costs, and secondly, many lone parents rely on informal child care, for example from grandparents. It is far from universally true that lone parents do not have access to either free or subsidised child care. There are limits to that, but I am not sure that that is a good enough justification for the distinction. Without specifying any particular level—although the Minister will try, I shall not be drawn on specific figures—we want to establish the principle that there might be some allowance for a second adult. 
 I give one example, of a couple on £150 a week with a two-year-old child. The figure has been given to me that a one-parent family on that income, relative to the official poverty line of 60 per cent. median equivalent income, would be £35 above the poverty line. The two-parent family on the same income would be £20 below it, using equivalent income, which is what the Government tend to use when measuring poverty. The simple question is, as there is an extra mouth to feed, should not the tax credit system recognise it, as the social security system does?

Howard Flight: I welcome you to the Chair, Mr. Beard. I only miss the opportunity of debating with you.
 Amendment No. 31 is in essence the same as amendment No. 50, but termed slightly differently. I have to confess that my hon. Friend—the hon. Gentleman, I should perhaps say—has stolen the example that I was going to raise. It is clear that there is a potential for unfair treatment of couples under the existing children's tax credit and working families tax credit. I hope that the Government do not intend to continue that under the new arrangements, especially, as has been pointed out, because that is not the case with social security benefits. 
 Couples in work are now less likely to get themselves and their children out of poverty than are single parents. Couples with children still form the largest group of families in poverty—about two thirds of the total. 
 Martin Wolfe made an in-depth analysis of the working families tax credit three or four years ago and found another aspect of the same point: that it was financially disadvantageous for a lone parent to acquire a partner or spouse with two children unless their income was below about £350 a week. That cannot be the intention of the support and help. The main issue is that the arrangements do not recognise the income needs of the other adult for straightforward maintenance, clothing, food and so on. The argument that that is matched by the saving in child care is not valid. The issue concerns not just informal care but the help with child care that is now available. 
 Amendment No. 31 would open the door to deal with that, but my main point is to ask the Minister not for the amount to be specified but whether the Government intend to address the point concerning the new child tax credit and the child element of the working tax credit.

Dawn Primarolo: Good afternoon, Mr. Beard, and welcome to our proceedings. You have probably noticed that, unusually in a Standing Committee, thus far we have scrutinised the Bill in a civilised way, even to the extent that the hon. Member for Arundel and South Downs (Mr. Flight) referred to the hon. Member for Northavon (Mr. Webb), who is a member of a different political party, as his hon. Friend. I am in greatly in favour of the Tax Credits Bill and claim that it achieves a great deal, but I had no idea that I can now add the proper functioning of a Standing Committee in a friendly and civilised way. However,
 perhaps that is more a reflection of the members of the Committee. The Government Whip is as delightful as ever; I am pleased to see him in his place and perhaps he could stay there.
 There is a fundamental misunderstanding about what exactly the child tax credit will provide as opposed to the working families tax credit, income support and the jobseeker's allowance. That misunderstanding revolves around recognition of the second adult. Hon. Members' comments referred to the cost of the adult to the household budget. The child tax credit is and should be independent of the status of the adults in the family. We are trying to ensure that the calculation is based on the children in that household. The child tax credit focuses on the children regardless of the status of the parents or the number of parents in or out of work. The right place to look at the level of support available to the adults in the household is the working tax credit or the benefit system as a whole and it may be more appropriate to discuss the matter when we come to clause 11. 
 Currently, there is no support system for children that provides an additional element for a second adult in the family, and no such provision has been offered since about 1988. In looking at ways to design and develop rules for the child tax credit, we used child benefit as our starting point—I should point out that we excluded the principle of universality—because it is very popular and well understood and there is high take-up. The elements of child benefit apply to children, and adults are disregarded. 
 Income support and jobseeker's allowance currently consist of an adult element and child elements. We are removing the child elements and including them in the child tax credit, but the adult elements will remain. The adult elements contain an additional element where there is, and will remain, a second adult in the family. Working families tax credit and disabled person's tax credit provide support for working families with children. They have fulfilled more than one purpose, in that they contain a mix of child elements and adult elements, and we are taking steps to pull out the child elements. The clause deals with the child tax credit only. 
 On the adult additional payment, I should point out that the child tax credit is directed solely at the needs of children and does not relate to the circumstances of adults until the tapers—the basic qualification—start. It contains elements for each child, and for any associated responsibilities—I shall avoid using the word ''burden'', as I do not consider children a burden—that families must shoulder in caring for children. 
 The working tax credit, with which subsequent clauses deal, will support families in work, and is counterbalanced by the support provided to families not in paid work. The support recognises that element and will be directed at adults at the relevant point in the process. I should point out to the hon. Member for Northavon that the child tax credit does not need to take adults into account. It is clean, direct and for children, and it is very important that there be no 
 confusion about the way in which we expect families to spend that money. Adult support should be considered in the context of the working tax credit, income support and JSA. 
 I hope that that answers the question that the hon. Gentleman and the hon. Member for Teignbridge (Richard Younger-Ross) have asked through the amendment. Given that I have worked on the Bill for a long time, such matters seem straightforward to me, but for many they are not and I understand why they asked that question. I hope that they accept my clarification, and that the provision constitutes a better way of designing policy. As I have said, support for adults and families is dealt with through the working tax credit, income support and JSA. Although the hon. Member for Northavon might want to return to the matter another time, I hope that he is willing to withdraw the amendment in the light of my comments. If he is not, I must ask my hon. Friends to vote against it.

Howard Flight: I had thought that amendments Nos. 31 and 32 might be taken together, given that the latter deals with this issue in relation to the working tax credit under clause 11. The Paymaster General did not say whether the Government intend to address the issue in full through the child credit or the working tax credit. For example, it would seem quite wrong for a lone parent with an income of £150 a week to be considered significantly above the poverty line, while a two-parent family with two children on the same income is considered significantly below it.
 It is fine to put the issue into the neat boxes that the Paymaster General has described, but that does not explain how it will be dealt with. In some senses, it could be addressed through not only the child tax credit but the working tax credit. I realise that she will not want to give the numbers, but can she say whether the issue has been recognised and quantified along the lines that we have described? Assuming that it will not be dealt with under the child tax credit, will it be dealt with under the working tax credit?

Dawn Primarolo: Stepping back from the design of the tax credits, the issue is the Government's policy objectives of eradicating poverty, making work pay, encouraging people to move into paid work and attempting to remove the barriers to returning to work. As we know, those barriers are greatest for lone parents, who still face significant obstacles to work. Although the child care tax credit provides generous help with child care, like everyone else a lone parent must find 30 per cent. of the costs. The facts show that lone parents are still much less likely to move into work. Although there have been considerable improvements, some 50 per cent. of lone parents are still out of work.
 We want to combine the provision with a work incentive, but it is not our intention to discriminate between families. We are addressing the drain on the family income through the moneys that are going in. Experience of working families tax credit in particular shows that such a measure is necessary to bring everybody up to the starting point, so that they can 
 move into work. Of course, the Government have other mechanisms for dealing with the barriers that lone parents face. 
 The question of how we will deal with the second adult is an important one, in that there must not be too great a distance between different household types. We must ensure that lone parents can move into work, but the distance must not be so great that the circumstances of two-parent households are worse. I hesitate to say it, but such factors must be taken into account in the final calculation, when all the thresholds, tapers and income disregards are put on the table, so that we can enter the income distributions and establish the effect on different household types. 
 I am afraid that I cannot give the hon. Member for Arundel and South Downs the confirmation that he seeks, but I see his point and it depends on settling the figures. We do not want inadvertently to increase the barriers to work for lone parents. The question of defining a household and recognising the number of adults therein is important. 
 I apologise to the hon. Member for Arundel and South Downs for not being able to be as clear and precise as he would have liked. However, it would have been easier for me to give any answer, knowing that it was not correct, and I have not done that. Rather, I have tried to be honest by saying that his point must be considered in the context of work incentives and of ensuring that we give help to lone parents, who suffer the greatest barriers to work and who, with their children, suffer the greatest concentration of poverty.

Steve Webb: The Minister has been helpful in putting on record the Government approach, and I take her point on whether the issue should be dealt with under clause 11. Amendment No. 32 will take us on to that territory, so I will pursue it no longer.
 The Minister described a neat separation between support for the child and for adults, but it is not that clear cut. There is also a family element—an amount per family. If that were not important, there would simply be an amount per child. The family element of the support for children attempts to reflect something—perhaps economies of scale—other than the number of children in the household. One could argue that economies of scale relate to multiple children and are nothing to do with adults, but it is not as clear cut as she suggests. 
 I accept the Minister's point about work incentives. It is true that lone parents have bigger barriers to work. It would be harder to argue a case for a lone parent with a 14-year-old, than for a lone parent with a one-year-old. For families with older children, a case for differentiating between one-parent and two-parent families is rather weaker. However, I take the point about finding the right place in the Bill so that we can address the issue in the context of the working tax credit. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Steve Webb: I beg to move amendment No. 49, in page 7, line 7, at end insert—
'(d) must include provision for the combined value of the child tax credit for a benefit unit in receipt of Income Support or Jobseeker's Allowance and the value of Child Benefit for 
such a family to be greater than or equal to the value of support in respect of dependent children available to a family of the same composition receiving Working Families Tax Credit, Children's Tax Credit and Child Benefit immediately prior to the coming into force of this Act.'.
 The amendment is related to levelling up or down and we may not have not got it right. At present, there are two forms of support for the children of families out of work. There is child benefit, but that is netted off income support. Essentially, there are family premiums, child personal allowances and income support, which are received per child when a person is not working. If working, a person receives child benefit, children's tax credit and, potentially, an amount per child or family through the working families tax credit. Those amounts are similar, but not the same. There is a difference between the two of roughly £4 for the first child, and £3.50 for subsequent children. 
 Given that the Government want to streamline the system and give an amount per child whether the parents are working or not, they must clearly pick a single figure. Many families in low-paid work will want to be reassured that the Government do not plan to level down their incomes so that they are given the same as that given for children whose parents are out of work. They will want to know that levelling up is planned. Rates and thresholds are issues for the Chancellor, but the principle is whether there will be real-terms losers among low-paid families. Many will wait for the Minister's response with bated breath.

Dawn Primarolo: I refer the hon. Gentleman to the remarks that I made previously. He wants me to state the absolute principle that there will be no losers or gainers. That principle is not linked to the Bill, but it is none the less a matter of great importance.
 The amount of expenditure on the proposals relating to the new tax credit will depend on the overall policy package, the framework for which is provided in the Bill, and on the rates and thresholds of the tax credits, which will be based on the values for 2003. 
 On the hon. Gentleman's second point, the level of support that is available will be determined by the Chancellor when he makes his overall decisions in the course of the Budget process of 2002. The principle to which the hon. Gentleman referred is crucially linked to the rates and tapers, not to the framework of the Bill. The appropriate time to discuss the matter is therefore at the time of the 2002 Budget. I can see that he is revving up now, and I hope that he is not in overdrive by the time we reach that point. I understand the point that he is making, and I am not complaining about his continuing to raise it, but he knows in his heart of hearts that it goes beyond what I am able to say to the Committee, given that the Chancellor has not yet taken the necessary decisions. 
 If the hon. Gentleman really wants to press the amendment, I shall have to ask my hon. Friends to oppose it. I am gratified that Opposition Members feel that the Committee process is enabling them to understand much more clearly how the Bill will operate. That is how it should be. I am thankful for small mercies, although I am unable to respond to the hon. Gentleman's specific point.

Steve Webb: I take it that that is a no, then.

Dawn Primarolo: It is a nice no.

Steve Webb: The serious point underlying the amendment is that more than 1 million, perhaps 1.5 million, families may feel some anxiety when they hear that everything is to be streamlined and that some people with similar family structures will get less than others.
 It would have been welcome if the Paymaster General could have ended some of the uncertainty about whether the Government believe in taking money away from low-waged families. Given the spirit of their proposals, I hoped that that would require only a modest assurance from her, and it is alarming that she could not even go that far. 
 On reflection, this is a specific amendment about current rates and thresholds, so it probably does not belong in primary legislation. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 9 ordered to stand part of the Bill.

Clause 10 - Entitlement

Howard Flight: I beg to move amendment No. 78, in page 7, line 16, at end add
'and having one or more children or qualifying young persons in their direct care, in the case of the basic element as defined in section 11(4)'.

Nigel Beard: With this it will be convenient to take the following amendments: No. 79, in page 7, line 24, leave out from 'persons' to ', or' in line 25 and insert
'has one or more children or qualifying young persons in their direct care'.
 No. 80, in clause 11, page 7, line 31, after 'persons', insert 
'having one or more children or qualifying young persons in their direct care'.

Howard Flight: The amendment is a drafting amendment designed to help the Government. The clause uses the phrase:
''responsible for one or more children or qualifying young persons''.
 We suggest a sharper definition. That relates back to the question of whether credits might be divided between two separated families who are responsible for more than one person in their direct care. However, that is not the main reason for the amendments, which deal primarily with one of the more important aspects of critiquing the Bill. 
 The Government will be well aware of the arguments advanced by the Institute for Fiscal Studies against extending working tax credits to couples without children. There is no established evidence that such an incentive to work is needed for that group of the population. A considerable number of people will be brought into the net of tax credits, yet there is no logic in doing so. When various parties asked, ''Why are the Government are doing this?'', the 
 only answer they received was, ''Well, the French do it.'' The Government have not in any way justified why they are extending the scope of tax credits to a component of the population for which the pricing people into work argument is not valid. 
 This is not a desirable measure. That goes right back to the main theoretical objections to tax credits that were raised 25 years ago, when I was standing as a candidate for Parliament. Help should be focused on those in need. Although it does not appear explicitly in the Bill, I understand that the Government do not intend to include parents under 25 in the working tax credit system, yet they are among the poorest, and perhaps the most deserving of help, in the population. What is the logic of adding to the benefits of those who do not really need them, while failing to address the situation of a group that does need assistance? 
 I hope that the Paymaster General will be able to respond to those points. We would need a great deal of persuasion as to the merits of supporting the principle of extending tax credits to couples without children.

Steve Webb: This helpful group of amendments takes us to the nub of whether we need working tax credits as distinct from simply adding adult elements to the children's tax credit. I shall try to refine the arguments that I advanced on Second Reading, instead of blowing £15 billion as I did on that occasion. The objectives that the Government want to achieve through working tax credits could be achieved by other means that would be less burdensome on business, better for the Exchequer and more effective in tackling poverty.
 The Government's proposals for working tax credits in respect of childless people will help only those who work for more than 30 hours a week and are aged over 25, with additional amounts for those aged over 50. The over-50s are a distinct group for whom there is a new deal programme because it is important to get them back into work. That alone does not, however, justify a tax credit for the whole population. 
 I cannot help noting in passing that the hon. Member for Arundel and South Downs stood for Parliament 25 years ago.

Howard Flight: It was 28 years ago.

Steve Webb: I was at primary school at the time, which puts it in context.
 What is the point of extending tax credits to a group of people who, with the exception of housing benefit, have not been in the means-tested benefits system since they began work? There could be an anti-poverty argument, but poverty rates are lower among childless people than among couples. The Government gave a figure—I cannot remember whether it is in the regulatory impact assessment or the summary of responses to the consultation—of 1 million childless families who are in work and in poverty. How many of those 1 million will fall within the scope of the working tax credit? Will it cover people who work more than 30 hours or the over-25s? 
 I am not being facetious, because if poverty is the issue and 1 million childless people are in work and in 
 poverty, one would hope that the mechanism designed to address that was catching most of them. My hunch is that the poor people in work are young people starting out on a career and people who are unable to do a full-time job, which means that they perhaps do a part-time job that they combine with caring. As the hon. Member for Arundel and South Downs pointed out, the Institute for Fiscal Studies states that cross-sectional poverty rates are higher among people who are unable to do a full-time job. There may be an issue about the dynamics of poverty and how long they stay poor, and I know that the Treasury has a view on that. 
 The question is whether this is an effective anti-poverty measure, and we have not had sufficient information from the Government about that. How many of the 1 million will it catch? If we are going to pay tax credits to everyone who is childless, but we are going to take all the family support away from the pay packet and deliver it to the mother, or whoever, through a bank account or direct payment, one is left with a rump of £15 a week, although sometimes it would be quite a lot more than that, and other times it would be next to nothing. Nevertheless, that is the average figure that I have in my head for the residual working credit. I hesitate to say, ''Is that all?'' because that is a lot of money to some people, but compared with the sums that families with children have been paid, it is radically smaller. However, we will need the whole bureaucratic infrastructure of payment through the pay packet to deliver payments of £15 a week. 
 The regulatory impact assessments suggest that we will pay fewer payments because some families with children will get no working tax credit. On the other hand, we are bringing in new people such as childless couples and single people, and those numbers roughly offset each other. The number of people receiving payment through the pay packet will be roughly the same although they will be different people. We shall have the same number of payments through the pay packet as we have at present, which is more than 1 million for each pay period, to deliver £15 a week. If we are worried about childless people and money for adults, we could tweak the tax system, although not in the crude way that I mentioned on Second Reading, by looking at the lower rate band and thresholds to get money to these people in a way that imposes no burden on business or the Inland Revenue in making those 1 million payments. 
 The amendment would stop working credits going to childless people. In many ways it does not go far enough, because if the working credits go only to families with children, one would not want a separate payment. All families with children are being paid a child credit, and one probably wants to lump it on the child credit and be done with it. The issues raised by the amendment are correct, and I should be grateful for clarification from the Minister as to how many of the 1 million childless families would get lifted out of poverty.

Dawn Primarolo: Let me start by clearing up a point on which the hon. Member for Arundel and South Downs was not quite right. On the question of who would have access to the working tax credit, the age of 25 is the entry point for childless households, but
 where there are children within the household, the same qualification as that for the children's tax credit applies. The age limit and the 30-hour rule for the working tax credit are specifically aimed at households in which there are no children.

Howard Flight: What is the age of access for younger people with children?

Dawn Primarolo: It is 16. It is unlikely that we shall find many households with parents who are 16 with dependent children, but it is conceivable. [Laughter.] It has been a long day.
 I want to address the point made by the hon. Member for Northavon—I am trying not to laugh at my faux pas—about why we settled on 25 given that the purpose of the two tax credits is to support children and to provide a work incentive. We recognise that in some cases they come together in one household, but in others they do not. If we return to our experience of the working families tax credit, given the criticism that it was too complicated and that people could not understand it because it combined those two activities, separating it into two credits makes sense. I get the feeling that the hon. Gentleman is not convinced on the working tax credit, but the Government are, which counts for something given our parliamentary majority, and I shall explain why. 
 The amendment's fundamental purpose is to exclude from entitlement those people in low-paid work who do not care for children. It would also provide an alternative test of whether a family cares for a child. Turning to the restriction of the entitlement to support to those without children, that entitlement is a fundamental part of the changes that we intend to make to improve support for those in low-paid work. There are several other initiatives such as the new deal 50-plus and the new deal for lone parents to move people into work. One objective of the working tax credit is to tackle the unemployment trap by increasing the gains from work for people on low wages who may otherwise face poor work incentives. 
 The hon. Member for Northavon suggested that the benefit might only be £15 a week, and I do not know what his constituents say to him, but my constituents consider their income in terms of 50p or £1 when they decide whether they are better off and how much better off they would need to be before they will move into paid work. We have been examining that range and whether it would be sufficient incentive to get people into work. 
 The unemployment trap is predominantly an issue for those with children and for older workers, who may have been made redundant and who are trying to return to the labour market, without children. It is also a problem for couples who face serious barriers moving into work because the gains can be very small indeed. A couple without children, of whom one earns £175 a week, are only £20 better off in work than on benefit. As the hon. Gentleman will know, people look at their entry wage. They know how much they need, and then look at the wage at which they can enter the labour market because of their qualifications and what is available. 
 We are looking to ensure that we can reduce that barrier as much as possible, so that such people get on the ladder of opportunity and start moving through the labour market. The hon. Gentleman rightly pointed to the figure of more than 1 million. There are more than 1 million people without children living in households in which someone is in work, but that have a household income below 60 per cent. of the median. The current in-work support, the working families tax credit and disabled person's tax credit, does not help those people. 
 The age is difficult to settle on—why 25? We are being cautious, but we are trying to help households that are moving into persistent poverty, if I can use that concept. Of course, there are other people in low-paid jobs not earning as much as they need, but they might be moving through that because of their age, or because they are new to the market. There are others, however, who have been in the labour market and, in that age range, are trapped in persistent poverty. The interaction with the minimum wage is also very important here. We have intervened for those people, in a similar way as with the new deal 50 plus. 
 The working tax credit will give us a broad-based system to enable us to identify problems in the labour market of persistent poverty and barriers to work and re-entry, so that we can intervene at those points. We have come to the conclusion that it is right to do that in households without children or disabled workers. Disabled workers are already in the scheme, outside the age range starting at 25.

James Clappison: With statistics flying between the Paymaster General and the hon. Member for Northavon, I wonder if she can clarify the figure of 1 million? Does that include people working less than 35 hours a week and aged under 25?

Dawn Primarolo: I do not have the exact point about the hours to hand, but I appreciate why the hon. Gentleman wants to know. I will do my best to tease that figure out and communicate with Committee members about it in the normal way.
 We are putting in place the working tax credit to help bridge the gap of families with no children and no disabled members. We thought it right for there to be no barrier if those people were working 30 hours a week. For those reasons, we decided that intervention was important, but it comes down to a matter of judgment. 
 On the point that the hon. Member for Northavon made, the working tax credit is a work incentive measure. Everyone who receives it, whether or not they also receive the child tax credit, will see the rewards in working and will be better off. Again, all the information that we have today shows that that is working in narrowing gaps and helping people to move into work. 
 The hon. Gentleman went on to talk about payment by the employer. That is the simplest way, and it works. It reinforces the link with work, and he will see in the Bill that, because of the new design of the tax credits, we have been able to reduce 
 requirements on employers. Obviously, when the research under way is done, we will have much more detail on working tax credit, but again the information coming back to us from employers and workers is that, despite a tiny minority who do not like it, it is working very well and achieving many of its objectives. I think that the Government fully recognise the points that are being made about having a working tax credit and about the need to intervene cautiously. That is why we have set the age levels and hours test that we have. 
 Miraculously, I can now answer the question about the figure of 1 million. That figure does include under-25s and those working less than 30 hours.

James Clappison: I am grateful to the Paymaster General for that speedy and helpful clarification, and I have another question following on from it. How many of the people in poverty fall into those two groups, the under-25s and those working less than 30 hours?

Dawn Primarolo: At this rate, I will not need to write any letters, because the answers are coming very speedily.

Mark Hoban: Will the Paymaster General give way?

Dawn Primarolo: I thank the hon. Gentleman.

Mark Hoban: I shall give the Paymaster General a break, and give her officials another task to perform in the meantime. How many of those 1 million people, if they are in work, are paying income tax? It sounds to me as if we are in danger of simply recycling money. People are paying tax through their pay packets and getting it back, through the Government's generosity, by a different calculation.

Dawn Primarolo: The calculation at employer level gives the tax credit. That will be named on the payslip as a payment of tax credit. Some people will still be paying some tax, but for those on the lowest incomes, the tax credit payment back is greater than if there had not been a tax credit and they had paid their tax.
 It is odd that the hon. Member for Fareham (Mr. Hoban) should ask that question, given that his party, when in power, taxed people, sent them all the way through one Department, then made them apply separately to another Department—in fact, several other Departments—to receive back payments in recognition of their low income, such as family credit. We are streamlining the system into one place. This system is more efficient than interfering with the tax code. We have had all the discussions about why it would be inappropriate to use that and why this system is more targeted than using the allowances or rates to maximise income for those in the lowest income groups, whom we want to help in the greatest numbers. 
 We have accepted the principle that the Government should give a continuous stream of support for children through the children's tax credit, and that they should, through the working tax credit, tackle the barriers to work and the unemployment trap. We must do that if unemployment is to continue to fall, and if we are to tackle unemployment and the poverty trap, where 
 people want to work, and there are jobs for them, but it does not make economic sense in their family arrangements to make the transition to work. Tax credits are one way of breaking that cycle, and the minimum wage is another. The Government's strategy is working through that and has been very successful. Any policy can be pulled apart and questioned, but we have seen how the system worked in the past and our proposed system is the simplest, most direct and clearest.

Howard Flight: I have another question about the precise relevant number of people. We need to know how many fall into the category of the replacement for 50 plus. How many of the 1 million people are relevant to the point that we are discussing?

Dawn Primarolo: I do not have that information with me. I really do not have it, and Committee members may keep me on my feet for as long as they wish, but I know that I shall not have the information immediately to hand. Hon. Gentlemen started asking for more information as soon as I put the figure of 1 million on the table. We are trying to deal with the problem in the labour market caused by persistent poverty that traps households of people aged 25 and over without children. There are plenty of indications that that needs to be dealt with, I shall be a little more careful when I cite figures in a certain area because they may be sliced in many ways. There is a problem in the labour market for that age range and we must approach it cautiously. Our objectives are correct, but we must be careful about the way in which they interact with the minimum wage and opportunities in the labour market.
 We have taken the cautious approach of starting with 25 years, notwithstanding the exceptions, and the 30-hour rule. That will help people in that group to move on through the labour market and to improve their position and wages without the current stark comparisons between households with children and those without, even when compensation is available for the cost of children in those households. 
 On the alternative test and the definition of direct care, I do not understand why the hon. Member for Arundel and South Downs wants to use the concept. Clause 8 was the correct place in which to deal with responsibility and care, but I do not see what benefit would be gained from using a concept of direct care. The concept of the main carer having responsibility, as we discussed under clause 8, is well understood here and in other areas—for example, child benefit. I just cannot see what would be gained by using the concept of direct care. It would simply add another definition, but would in fact mean the same as the existing definition. 
 The hon. Member for Arundel and South Downs is trying to tighten the provision, but his amendments would not work and are unnecessary. I can see that I have not done so well this time in convincing him. Unless he stands up to voice blindingly obvious points that will make things clearer, and I do not see how he could, the question on direct care is not relevant. I ask him to withdraw the amendment. 
 I hope that I have clarified, in terms of age and household type, who would qualify for the working tax credit. I have also demonstrated the Government's thinking on how we will target a particular group, the age range of which starts at 25, by dealing with the restrictions in the working tax credit. The beauty of the tax credit is to allow for a foundation on which we can respond as the labour market changes. Pressures on work incentives and assistance, and on tackling poverty and unemployment traps, might change over time, so we have a framework. I hope that the hon. Gentleman will withdraw the amendment, and if he does not I will ask my colleagues to vote against it.

Steve Webb: I am grateful for the Minister's response. When I say that £15 is not much, I mean that it is not enough to justify a separate administrative system—£15 could be delivered in another way. It is not a question of £15 or nothing, but one of £15 through the pay packet, a tax allowance increase or another mechanism such as reducing the lower-rate band. I want the low-paid to have the £15, but we must address how to deliver it effectively. Delivering the money through tax allowances and bands, rather than credits, still gets the money in the pay packet and people will be able to see the benefit of working. They will look at their pay packets, see what they are being given and judge whether it was worth working and whether they feel better off. That argument does not undermine the reward to work, but delivers the money in a cleaner fashion.
 I will not stray on to the under-25 issue because it will be dealt with under the next amendment. A critical point is the unemployment trap and the fact that childless couples will find that the sorts of jobs that they can get will make them only £20 a week better off. There are two sorts of households: those who are renting and those who are buying. The figure of £20 will mean something different to different households. The reason why some childless couples are virtually no better off in work is because they have a socking great rent, which is covered almost in full when they are not working and almost not at all when they are in a job that puts them beyond the housing benefit taper. They really wonder about working. Someone with a mortgage that is not being covered by the income support system—that applies to a growing number—has a bigger incentive to return to work because they do not lose housing help. 
 The argument for the working tax credit and work incentives does not apply strongly to those with mortgages. The gap is bigger than £20 for people with mortgages and probably £20 or less for those renting. If the problem is rapid withdrawal of housing help and high rents, the answer must be to tackle that and not to invent a system that covers the entire working adult population over 25. We have not talked about housing, although it is central to the unemployment trap. I hope that the Government will continue to think about that.

Howard Flight: I thank the Minister for her comments but I fear that she is correct that we have not been persuaded of the Government's position. Even though the amendment may be in the wrong place, I will
 briefly deal with a semantic point. It is fair to say that ''responsible for'' is slightly woolly, and although the Government have made their position clear on appointing a sole carer, our wording—''in their direct care''—is much sharper. That is not an issue of huge importance, but the more sharply legislation is drafted, the better.
 It seems to us, however, that the Government have got main issue wrong. Of the group that they are targeting, on the figures from the Institute for Fiscal Studies, only 2.5 per cent. fall within the definition of poverty. The employment tax credit is available only to adults without children who work full-time for 30 hours a week. They are not the problem group in our society. Those under 25 are very different. Of those, some 21.5 per cent. fall into the poverty category. For better or worse, the measure is not fulfilling its main aim of alleviating poverty. If the Government's aim is to help those in need, they are tackling the wrong target. 
 As the Institute for Fiscal Studies points out, the only other case, which the Minister tried to put, is that the measure will be an incentive for couples without children over 25 to move from part-time working below the target of 30 hours a week to fuller-time working, and that the Government have introduced the measure because they want to encourage that. However, I see that as a little area in which Speenhamland disadvantages could operate, and if this could be an incentive to employers to let the state become a part of their wage costs, they will let it do that. 
 There is therefore an argument that the measure will depress remuneration for just the category of people on whom it will impact. Our position is that the Government have got the measure wrong, so I am not inclined to withdraw the amendment. The IFS paper has put the onus on the Government to make a case that is not there. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 4, Noes 10.

Question accordingly negatived.

Steve Webb: I beg to move amendment No. 62, in page 7, line 22, at end insert—
'except that the minimum age of entitlement shall not be less than that for the child tax credit.'.
 I intend not to cover old ground again but to flesh out, on the issue of age, what we are trying to achieve here. It has been suggested, and it is apparent in clause 10, that the Government plan regulations about the age of relevant people, and that that age will be 25 in 
 the case of childless people. We are suggesting that that age should be no less than the minimum age of entitlement for the children's tax credit. We may have gone a bit far in that respect, given that, as the Paymaster General said, that age is 16. Someone who spent an awful lot of time doing paper rounds might be caught. 
 I want to flesh out the subject of age. It could be that 21 or 18 is the right age for the threshold. We made the assertion that poverty rates among young people, especially those who are not working full time, are higher than among older childless people, and the IFS figures bear that out on a cross-sectional basis. It is a question of persistent poverty. Will poor 21-year-olds always be poor, or is it so transitional that we do not need to worry about it? One could argue that any year spent in poverty is a year too many—the fact that those people are in poverty now is a problem, and the possibility that they might not be in poverty in three or four years' time is of little reassurance to them now. That alone would be a reason not to exclude them on poverty grounds. 
 How can a 21-year-old be in persistent poverty? If the Government's definition of persistent poverty relates to people who have been in poverty for the past three consecutive years, 21-year-olds may not count as poor because they were students resident with their parents for half the year, so cannot have been caught in the definition. I wonder whether we are comparing like with like. On poverty grounds, there are two good reasons for saying that we should not exclude 21 to 25-year-olds. First, any time spent in poverty should be dealt with, and secondly, they may be heading for persistent poverty but we do not yet know that. 
 The 25-year-old cut-off was invented by the Conservatives in 1988, when the system changed from one in which people got money through supplementary benefit for being a householder or a non-householder to one where people got some money for being 25 and less for being under 25. In effect, the Government of the day said, ''We don't want the state to support young people living away from their parents—they shouldn't be helped to do that.'' The benefits system switched from supporting householders, which would have helped young people who lived away from their parents, to supporting the over-25s, on the grounds that by that age they would be living independently anyway. 
 That system is hard for those who do not fit, especially for younger people who become householders under the age of 25, who fall foul of the working tax credit rules as well. Not only do householders under 25 who may have had to leave the family home through no fault of their own get less support through housing benefit merely by dint of their age, but if they can get a job they get less support through the working tax credit. 
 The threshold of 25 is utterly arbitrary and is being used because there is already such a threshold in the system. However, that threshold was itself introduced entirely arbitrarily. Obviously any threshold is arbitrary and one can ask why someone is different the day before or the day after. However, this 
 threshold requires justification. A threshold of 21 could perhaps be justified on the grounds that people will typically have gone through graduate education and will be starting in the work force, but the threshold of 25 seems to have no external justification other than that it is already in the system. 
 We wanted to ensure that the minimum threshold for the working tax credit could not be lower than the entitlement to the children's tax credit. As that is 16, we may have been going a bit far. Something between 16 and 25 might be appropriate.

Dawn Primarolo: I make no apologies for the Government's being cautious in interpreting the data available to us on problems and barriers in the labour market and incentives to work, and in balancing the initiatives at the different points at which we are engaged throughout the age range. The hon. Gentleman does not want a wage subsidy, yet he proposes introducing one at 16. He understands the importance of the interaction with the minimum wage and the point made by the hon. Member for Arundel and South Downs about not putting in place something that inadvertently leads to a cap on the wages that employers would pay in that range. We are carefully and cautiously considering the issues surrounding the labour market. I am not persuaded by the suggestion to make the age 16, or any age other than 25. Caution is necessary.
 For those under 25, other issues are involved, on which the hon. Gentleman touched. We are trying to identify persistent poverty—not when people might be in poverty but when a problem is definitely being experienced in the labour market. For the under-25s, not only is an age point involved, relating to how long people have been in the labour market—there may be lots of reasons why they have entered it only recently—but the proposal would cut across the Government programme to raise skill levels, improve training and encourage people to stay in education—and especially proposals such as the new deal for the 18-to-24s. That group is well covered by the new deal, and if a problem persists, the working tax credit would be introduced, as no child responsibility or disability is involved. 
 I hesitate to speak in these terms, but I cannot think how else to phrase my point. The hon. Gentleman is right to say that suffering poverty for any period is a dreadful experience for anyone, and best avoided. However, there may be reasons for it. People move quickly through the labour market, which is an unpleasant experience but one that is none the less short. We are trying to deal with circumstances in which the problem is much more deep-seated, according to our information. 
 We are not attracted to the proposal for a lower age. The concentration for those aged 25 and over who have no children and are in full-time work is greater than that for the under-24s. We shall start where we believe the maximum problem is, and we shall be careful, which is what the hon. Gentleman usually implores us to do. Ironically, we are following his usual caution, which is to recognise that an issue is 
 involved, that trends are emerging and that we have arrangements up to that point and should go steady, because we must watch the interaction with the minimum wage and what is happening to wage rates generally and to that age range. No one disputes that there is an issue for households without children in that age range in particular income ranges.

James Clappison: I think that the Minister said that there was a greater concentration among over-25s working full-time. She did not say what it was that was concentrated. I would be grateful if she could clarify what the Government are saying on that subject.

Dawn Primarolo: Among households without children but in full-time work, over-25s are five times more likely to be in poverty than 22 to 24-year-olds. Those are Government figures. That shows that there appears to be a particular problem for over-25s in terms of concentration.
 We are making a simple policy choice. Either a political party accepts that it should intervene to eradicate poverty, and takes the necessary steps as gently as it can, or it does not. The Government take the view that they should intervene. Households with children were our first priority, but we have always known that there were issues for childless households, although they are affected to a lesser extent as they do not have the responsibilities and costs of raising children. None the less, such issues exist, and we are now tackling them. 
 I do not know whether the hon. Gentleman wants to press the amendment, which would take the minimum age down to 16. I could tell him how much that would cost—that might clarify his position. I am trying to explain to him that we have not simply put our finger in the air and decided that 25 seems a convenient age. We have tried to analyse the information available. It is the first time that such a measure has been introduced, and we should go cautiously. I hope that he will consider withdrawing the amendment.

Steve Webb: The Minister raises the important issue of the new deal, which is a major program that coincides with the over-25 threshold. She made a fair point. The minimum wage changes when people reach 21 or 22 years of age. That is an argument for a different threshold, but I take her point.
 The hon. Member for Hertsmere (Mr. Clappison) intervened on the subject of relative poverty rates. I presume that the Minister was referring to rates of persistence of poverty, rather than cross-sectional poverty. The incidence of cross-sectional poverty is much higher for the under-25s. 
 Under the amendment, we envisaged an age threshold of about 21 years. Clearly, it would be going too far to lower the age to 16. For that reason, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Steve Webb: I should like to raise an issue that I told the Minister I would raise this morning. We have not yet covered it in our discussions on the amendments. It
 is how the definition of ''remunerative work'' affects expectant mothers. Maternity Alliance raised the issue with me, and pointed out that under the proposed rules, when a woman shifts from paid to unpaid maternity leave, she could fall foul of the remunerative work rule as she had ceased to do remunerative work, and could lose the working tax credit. Under the existing working families tax credit, there would be no adjustment because of the fixed six-month rule, and once the money was awarded, the expectant mother would receive help. Will the Government consider whether, under the provisions for remunerative work, mothers whose maternity pay ceases after birth would still be entitled to the working tax credit?
 The Government have an agenda for maternity and paternity leave. In general, it will not be paid by the state beyond statutory minimum levels. If the Government want to encourage parents to take that leave, making the working tax credit available would create more of an incentive for them to do so. 
 The final issue raised by Maternity Alliance is whether people come into eligibility only after the birth of the child. That relates to the clause, because whether one receives the working tax credit and is subject to the relevant hours threshold depends on whether one has children. The Government might consider whether a woman during her period of confinement, or in the latter stages of pregnancy, might start to come within the scope of the working tax credit or child tax credit, given the strong evidence that maternal welfare during pregnancy has a strong bearing on the welfare of the child and its subsequent development. Do the Government have any thoughts along those lines? The question of remunerative work and whether women receiving maternity pay would lose it under the new system should be addressed.

Peter Luff: One of the attractions of opposition—they are few—is that those who normally remain silent are occasionally allowed to give voice. In that, I have an advantage over the hon. Member for Bradford, South (Mr. Sutcliffe). I hope that he and the Minister will think that it is appropriate that I allow myself the luxury of a few words.
 I am glad that the hon. Member for Northavon spoke first, as he highlighted the inadequacy of this and several other clauses in the Bill. In a sense, the Minister's response to what he just said is terribly easy. She can just say, ''We'll deal with that through regulations when they are drafted.'' 
 My concern, which I have not expressed in previous debates—as I am a member of the usual channels, it is an especially lively concern—is the extent to which the Bill and the clause confer regulation-making powers on the Government. The Minister will be familiar with my concern, which she will have heard expressed in other Standing Committees, and which her Government colleagues will have heard from other Opposition Members on previous occasions. I am genuinely puzzled by the number of occasions on which, increasingly, Bills merely confer order-making powers on the Government. This Bill seems to be a 
 classic example. It provides the Government with permission to go away and do what they choose, how and when they choose to do it. 
 Arbitrarily, I have alighted on clause 10 as an opportunity to make that point. There are other clauses under which matters that could have been determined subsequently by regulation are spelled out in considerable detail. Clause 11 seems to be one such—the Minister may correct me on that—whereas clause 10, which contains important provisions in relation to the workings of the Bill, leaves it to regulation. The definition of work in relation to the working families tax credit is subject to regulations, whereas the next clause spells out a maximum rate in considerable detail. Why is that? 
 By my arbitrary calculation, I reckon that clause 10 represents the seventh occasion in the Bill on which we have been invited to confer on the Government the power to make regulations. In this instance, the regulation is rather straightforward. I chose not to speak on earlier clauses because they contained matters of substance that the Committee had debated, and I was anxious that we should make progress. I shall not labour this point, as you would rule me out of order if I did, Mr. Beard, but clause 4 is another example, and clause 6 in particular is merely a list of regulations that the Government could make. Arguably, a whole series of regulations could be made. By my calculation, power is conferred on the Government to make regulations on 19 separate occasions in the Bill. Clause 6 is one of the worst examples—

Nigel Beard: Order. The hon. Gentleman should return to clause 10.

Peter Luff: I take your advice, Mr. Beard, and am grateful for it. I certainly will. However, I do not want to rise each time that a clause mentions a regulation-making power. The Government Whip would think that I wanted to delay the Bill unnecessarily, and I do not want to do that. If you could give me a modicum of indulgence, I will not refer to such issues again during our proceedings.
 There are about 19 separate occasions that specify the way in which the regulations under clause 10—and most worryingly those under clauses 60 and 61—will be applied. I shall not refer in detail to clauses 60 and 61, because I do not wish to debate them now—

Nigel Beard: Order. I have allowed the hon. Gentleman a modicum of latitude, but he should stick to clause 10.

Peter Luff: It is important to say that the clause relates strictly to clause 61, because that defines each regulation, including the one under discussion, as being implemented by the negative procedure. The hon. Member for Northavon raised an important point about the treatment of expectant women, but such regulations cannot be amended or even debated. That is a worry. I will not labour the point, Mr. Beard, because you have already chastised me on several occasions.
 I read the explanatory notes to clause 10, to see why regulation-making powers are necessary. They are the most unilluminating notes I have ever seen. They simply repeat the clause using different words. In one sense, that is a tribute to the parliamentary draftsman, because clause 10 is easy to understand. One of the reasons why I did not speak to earlier clauses was the fear that I might get dragged by interventions into discussing the details, which, frankly, I have often not understood. Members of the Committee include a barrister, a professor of social policy and a distinguished figure in the City of London, all of whom have detailed understanding of such matters. 
 Clause 10 is the type of provision under which regulations are unnecessary. Clause 1 introduces the working tax credit, and surely it should define work without relying on a subsequent definition introduced under the negative procedure at a later date? That is a most unsatisfactory procedure. 
 Although there have been rulings that there be no stand part debate, there has, in fact, been no yearning for one, because members of the Committee take the Bill seriously and are anxious to make progress. In response to clause 10 stand part, will the Minister explain why clause 10 does not define work without relying on a regulation-making power at a subsequent date? Will she also say why the Bill relies so heavily on regulation-making powers at a later date with regard to almost everything of any importance that it wishes to do? That is a serious flaw. Perhaps the hon. Member for Bradford, South and I should be pleased about the negative procedure because it means that we spend little time discussing regulations in Committee. 
 The issues are important for the people that they will affect. The Government are rushing the Bill through—particularly clause 10—before they have finished thinking about what they want to be in it. Had they delayed for a month or two, they could have provided a definition of work. The issues—the number of hours worked, the age of the claimant, the disability, the responsibility for a child—are spelled out in both the clause and the explanatory notes. With a little more time and consideration, the Government could have paid members of the Committee the courtesy of a definition of work under the Bill.

Nigel Beard: I hope that the Minister will not accept the hon. Gentleman's invitation to go beyond clause 10.

Dawn Primarolo: I would most certainly not accept such an invitation. I wish first to deal with the regulation-making powers. I remember making similar points to those made by the hon. Gentleman when I was a member of Her Majesty's Opposition before the general election in 1997. Under our parliamentary system, Opposition parties are duty bound to make such points. Government have also determined what is—and what is not—to be provided for under regulations for a considerable time. I remind the hon. Gentleman of when his party proposed similar legislation and the extensive regulation-making powers that they used. Certain Bills and regulations allow us to alter some of the variables according to changes in circumstances, without recourse to parliamentary time, because primary
 legislation requires more time and is more difficult to programme.
 For the record, I inform the Committee that the levels at which family credit—the system introduced by the Conservative party—was paid were set out in regulations and subject to the negative resolution procedure, and so was the mechanism by which family credit was withdrawn, although we have set that out clearly under the Bill. The definition of work in respect of family credit was determined under regulations and, guess what, they were negative resolutions. 
 I shall save the hon. Gentleman's blushes. Although I may damage his political career, I must say that I like him.

Peter Luff: That is reciprocated.

Dawn Primarolo: None the less, he made an important point about how regulations are used. I have tried at every opportunity in Committee—as has my right hon. Friend the Financial Secretary—to spell out in great detail the Government's thinking in respect of the regulations. Those in the other place take great care in such matters and they will want to see the draft regulations. By the time the Bill returns to this House, members of the Committee will also have the opportunity to examine them.
 I understand the hon. Gentleman's frustration. I assure him that I did not sit down and say, ''Goody, goody, let's have regulations four sentences long and, what is more, let's have them under the negative procedure''—much as I may have been tempted. These are procedural points, but the Bill will be doing nothing that does not follow a path well trodden by Conservative Governments. It is important that such points are on the record, and I am not complaining about them. I am grateful that he waited until clause 10 to advance such an argument and did not consider that he had to do so under each clause. I note the seriousness of the issue that he raised, which is that of enabling hon. Members to scrutinise proposed legislation properly.

Peter Luff: I am grateful to the Minister, particularly for her expression of an affection that I reciprocate. She gave us an assurance on draft regulations. I do not imagine that she meant that that would apply to every regulation in the Bill before Report, but if she did mean that, it is welcome. Will she clarify her exact undertaking? That is not a criticism, but a request for information.
 On her broader point, the Minister is correct that two wrongs do not make a right. I was uncomfortable about some things that happened in the past. Will she look back through all the regulations and consider whether any could be introduced under the affirmative rather than the negative procedure? One of my hon. Friends may wish to examine that on Report.

Dawn Primarolo: I hope that the hon. Gentleman will excuse me if I do not do that right now. After we have considered each clause and moved to the next, I have sighed with relief and tried to make my brain accelerate to the next points. It is difficult to go into reverse.
 The hon. Gentleman's point referred to detail. I will try to make as many of the draft regulations available as possible. However, it is clear from the Committee's discussions that there are key sets of regulations in which hon. Members are particularly interested. They happen to be the regulations on which we are still consulting. 
 I intend to get as much information as possible before Report but if I do not achieve that, I do not want the roof to come down. If I get all the information, that will be fine. The regulations must come in, but the key regulations will appear toward the end of the process because consultation is still occurring. However, I understand clearly that members of the Committee will want to see them. 
 I hesitate to make my next point. The hon. Member for Northavon is correct to identify the example of a woman in receipt of statutory maternity pay or extended maternity leave from her employer. The question centres on the ability of a person who is in work, or not, to access the working tax credit, and also crosses over to other programmes that support parents, such as the sure start grant. We must address the matter following further decisions by other parts of Government. I will examine carefully the issues—forgive me for saying this—when we draft the regulations. None the less, returning to the hon. Gentleman's point, it would be difficult to put a provision in the Bill while another Department is finalising exact points during consultation on maternity and paternity leave. The matter will be dealt with when we have the information that we need. 
 I have covered the major points that were addressed in the debate, and I hope that members of the Committee will support the clause. I understand the frustration of the hon. Member for Mid-Worcestershire (Mr. Luff) about regulations and details. I hope that he accepts that I am doing my best to give as much information as possible without misleading the Committee by implying that a decision has been taken, when the matter may still be open for discussion.

Howard Flight: May I ask the Minister for clarification on the most important point under clause 10, which is the number of hours worked? As the explanatory notes point out, that will be the main definition of entitlement. The Institute for Fiscal Studies has raised questions about this matter. Given that we will be working on an annual—rather than six-monthly—basis, will we be dealing with the average for a year? As the mechanism of past year earnings will be used, how will that be interlaced with the future number of hours worked? I assume that the current number of hours worked will be the relevant criterion, but what is the principle behind the Government's approach with regard to the number of hours worked?

Dawn Primarolo: The 16-hour rule will carry forward, with regard to the working families tax credit and disabled person's tax credit, and we are looking closely at how to measure that across the year,
 so that people do not fall in and out of categories, which might happen in some cases.
 During the consultation process, we received representations in favour of varying the 16-hour rule, but we are not prepared to do that. However, the annual assessment could be tailored to give some latitude, with regard to the calculation of hours. 
 It is important to get that matter right. With regard to the current tax credits, the calculation of hours is rigidly fixed. We do not think that that is appropriate. We are examining ways in which the new tax credits might address that calculation more flexibly, because—for example—people's hours could fall and then rise during the course of a year, so that their annual average would be high enough to reach the 16-„hour rule, and it would be difficult to explain why they did not qualify. However, we also need to ensure that changes to the rule will not cut across any employment rights, such as contributions. We have nearly achieved our aims in that regard. 
 It is true that the introduction of the new tax credits gives us the opportunity to make matters smoother. We might be able to help certain groups, such as people who have a chronic disability, and whose health deteriorates, resulting in a reduction in their hours, but who subsequently return to the labour market; that variation will not be reflected in their hours across the year. 
 I cannot be more specific about such matters at the moment, but the new regulations will not be as rigid as they are in the current arrangement. The annual assessment gives us more room for manoeuvre, and it helps with administration, because it will be easier to understand. 
 Question put and agreed to. 
 Clause 10 ordered to stand part of the Bill.

Clause 11 - Maximum rate

Howard Flight: I beg to move amendment No. 32, in page 8, line 19, at end add—
'(8) The prescribed manner of determination must take account of the needs of all the members of a married couple or an unmarried couple by comparison with those of a single person'.
 The amendment would ensure that couples in which one partner or spouse does not work are not unfairly treated. 
 I referred to that issue earlier. The Minister pointed out that it was less suitable to raise it with regard to child tax credit than to working tax credit. With regard to the definitions of entitlement to working tax credit, do the Government intend to address the point that I and the hon. Member for Northavon made earlier about the difference between people who are a decent margin above the poverty line who are lone parents with two children, and people being below it when they are in partnerships in which one spouse is not working? The amendment would make provision for them to address that. 
 The Minister did not refer to the work of Martin Wolfe. That is a serious issue. We do not want a tax credit system that gives significant fiscal advantage to 
 one person not to partner up or marry another when children are involved. It is ridiculous that there should be a disincentive to partner up until the partner has earnings that are 170 per cent. of average income. As she said, that needs to be dealt with. Her prior comments suggested that the Government did not feel like doing that. They may do so marginally, but not in a way that will truly level out the problem. She requested, however, that we focus on such issues now rather than when we discuss the child tax credits, so I look forward eagerly to her giving me comfort that such matters will be addressed adequately.

Steve Webb: The Minister argued that there were two reasons not to give equivalent support to a two-parent family and a one-parent family. Work incentives were essentially the issues involved. If the working tax credit were not about children but about adults, such arguments would not be so strong. If there is a problem with child care incentives, we should deal with that under a child care tax credit and other mechanisms. However, if it concerns poverty, the argument about the inequality between a one-parent family and a two-parent family is much less acute in the case of childless families. The case for penalising a two-parent family, not a one-parent family, seems harder to make in light of childless families.
 The Minister said that income support, housing benefit and working tax credit constituted one benefit, while measures for children were another benefit. Well, if housing benefit, income support and working tax credit are of a kind, and housing benefit and income support recognise second adults, why is working tax credit not included? If she is categorising such benefits as those that support adults and two out of three of them give something with which to feed the extra mouth, why should not the system under the Bill do the same? I cannot see the reason for such a distinction.

Dawn Primarolo: The amendment would ensure that couples who are awarded working tax credit always receive a higher award than single people in similar financial circumstances. I do not disagree in principle with such a proposition. However, the amendment is unnecessary because clause 11 provides under subsection (6)(b) for a second adult element in addition to the basic element that all recipients of the working tax credit will receive.
 As we have discussed at length, the working tax credit is a work incentive measure. We are well aware that both lone parents and couples are likely to face greater barriers to work than single people with no children. The living costs of couples, whether or not they are responsible for children, will be greater than those of single persons. If the hon. Members who support the amendment are angling for a commitment on the relative rates of the second adult element and the lone parent element, what a surprise, I cannot give them one. However, I do not believe that they are. 
 Setting the rates of all the elements of both the new tax credits is a matter for the Budget, and we shall not debate it today. However, I assure hon. Members that we fully intend to include in the working tax credit all the elements in clause 11. 
 Work is already well under way on the regulations to be made under the clause, which will provide for an additional element for claims in respect of both lone parents and couples. The maximum rate of the working tax credit payable to those categories of households that claim will, therefore, always be higher than the maximum for the single. That covers the point made by the hon. Members for Northavon and for Arundel and South Downs. Now that I have made it absolutely clear that we intend to use all the elements in the clause, I hope that they will appreciate that the amendment is unnecessary and that, rather than making the Bill longer, the hon. Member for Arundel and South Downs will agree to withdraw it.

Steve Webb: That is a tremendously welcome announcement. I suppose, considering the matter, that that should have been obvious, but it did not jump out, and until today we did not have the assurance that the power in the Bill would be used.
 Did the Paymaster General say that there would be a second adult element in respect of couples? I believe that she mentioned lone parents in the same breath. Was she effectively saying that lone parents would be deemed to be couples for the purpose of the working credit? What did she mean by that? We are separating children and adults—the clause relates to adults, not children—but are saying that couples will receive an extra amount for the second adult regardless of whether they have kids, but single people who have kids will receive an extra amount through the working credit. I hope that she understands why I am slightly confused by, although delighted with, what she has just said. What did she mean?

Dawn Primarolo: I may inadvertently, in trying to clarify, have first clarified and then confused the matter. The essential point that the hon. Members for Arundel and South Downs and for Northavon make relates to single people or couples without children and the additional adult allowance. The clause provides for an element to be added. Two elements are involved, for both of which the rate would have to be set. The first relates to a second adult. The other relates to lone parents and would recognise that some costs are fixed, regardless of whether there are two adults or one in the household.
 The point that the hon. Gentlemen make relates to whether there is an additional adult allowance for couples without children. What the amendment would provide is already provided for in the clause. I presume that the hon. Member for Arundel and South Downs knew about the intention behind the amendment.

Howard Flight: With respect, and as I thought that I had made clear in discussing amendment No. 31, which dealt with the same subject as amendment No. 32, the issue does not relate to couples without children. In simple language, under the present working families tax credit and children's tax credit, if one parent in a couple is not working, for reasons such as young children to care for or the place in which the couple live, there is no recognition of the economic needs of the non-working person.
 The illustration to which the hon. Member for Northavon and I referred shows the effect of that on families on, say, £150 a week, with two children. A lone parent would end up £35 above the poverty level and a couple in which one spouse does not work would end up £20 below the poverty level. That is a £55 material difference. The same issues were raised when the working families tax credit was introduced. A different way to make the point is to say that there are tax credit disincentives to partnering up for the single person with children. 
 When we suggested that the matter should be addressed as a special element in the child tax credit, the Minister said that we should address it in relation to working tax credit. Our amendment is broadly drafted. We want a commitment from the Minister that the arrangements for working tax credit will contain an element that takes specific account of the non-working spouse's economic needs. That could be achieved by adopting the amendment or it could be covered under subsection (6), as the Minister said. Our welfare objective is to ensure that there is not considerably greater assistance to lone parents compared with couples in which one person does not work.

Dawn Primarolo: I cannot follow the hon. Gentleman's logic with regard to the second adult element. I have assured him that the issue is whether a lone parent would be at an advantage compared with a couple in which one person did not go into paid employment. I said that we must address greater barriers to lone parents than their ability to work.
 The structure of the elements in the clause provides for additional optional elements. Certain elements form the absolute base of the working tax credit, but optional elements should provide extra financial support to increase the incentive for work. The elements take account of greater living costs that are incurred by certain categories of claimant. The second adult element falls into that category. 
 The hon. Gentleman makes a slightly different point that is more about household structure and people's choices on that. He implied that people would choose to be lone parents because they would be better off than if they were in a two-parent household, and that the Bill will provide an incentive for that. I reject his first proposition that people choose to be lone parents because they would be a few quid better off. Anybody who knows about the experience of lone parents will know that, unfortunately, the overwhelmingly majority become lone parents because of often tragic and difficult personal circumstances, which they did not choose. Being a lone parent is considerably harder than being in a two-parent household. In the end, the hon. Gentleman and I have a different view. I do not believe that people choose to be a lone parent because they will be financially better off, and the Bill does not provide for that. 
 The hon. Gentleman's point is about the interaction 
 of those elements. He is right that when those elements are balanced, and a level is set, the position of two-parent households in which one parent is not in paid employment should not be skewed dramatically. He is mixing up a case for its being better to be in a two-parent or married household than in a lone parent household, and asking whether the Bill is a piece of social engineering that pushes people to being in one-parent households. I assure him that that is not the case. 
 The hon. Gentleman's point about the second adult element is dealt with clearly in the Bill. I have explained that twice, and it has been accepted that it is clear. His views on what is a better household type—single or married—are not a matter for the Bill, which tackles poverty traps, unemployment traps and work incentives, and responds to the barriers that exist in those circumstances.

Howard Flight: The Minister has somewhat misrepresented what I said. My point was that none of us would want a situation in which a lone parent was discouraged from partnering up with someone because the net effect, if that person was not working, would be a £50 fall in disposable income. It would be crazy for that to be the case, although at certain levels that is how working families tax credit operates. Although I am grateful for what she said, the Opposition are looking for an assurance, in common-sense language, that if the situation is not catered for under working tax credit, the Government will make arrangements to ensure that that does not happen.

Steve Webb: The debate on the amendment has been helpful. Subsection (6)(b) gives the Government the power to provide a second adult credit in respect of a person who is married or in a couple, whether or not there are children. It also gives a power to provide extra sums to a lone parent. Therefore, the only people who are not covered are those who are single and childless. That is a welcome step in the direction of the spirit of the amendments.
 I cannot help feeling that the matter has been dealt with and, having received an assurance that the Government will use the power, that the amendment is no longer necessary. However, I am still slightly puzzled as to why the question of whether someone has a child is being muddled with the working tax credit, given that we were told this morning that it was not about children. It therefore seems a strange place to deal with that issue. However, I am sure that there are reasons for that, which will perhaps be discussed outside the Committee. I want to put it on the record that I welcome the progress that the Government have made on the issue, and the amendment is therefore unnecessary. 
 Amendment negatived 
 Question proposed, That the clause stand part of the Bill.

Mark Hoban: I take this opportunity to raise an issue that I mentioned on Second Reading. Subsection (6)(a) deals with the hours that can be worked by single persons and those living together as a couple. A
 couple could aggregate their hours to meet the 16 and 30-hour limits that we have discussed, but a single person would have to work either 16 or 30 hours. That puts lone parents at a disadvantage. Couples could manage their time to achieve 30 hours between them. Lone parents would have to work harder to meet the same limit and qualify for additional premiums. I raise that as more of a question than a speech, and I am open to clarification from the Minister as to whether my interpretation is correct.

Dawn Primarolo: The interpretation is that a couple would be able to combine their hours to complete the 30-hour element as long as at least one partner worked 16 hours or more. The 16-hour limit is still there, but we are allowing couples to aggregate their hours, instead of requiring one parent to work 30 hours, if both parents are working.
 In the case of lone parents, the 16-hour rule applies. We thought it fair that if both parents work, but neither works a 30-hour week, they should be allowed to get 30 hours in the same way as lone parents. That is an equalisation, not a disadvantage. It is a benefit to households in which couples work part time.

Mark Hoban: I understood the Minister to say that a two-parent household can aggregate its hours to get 30 hours as long as one person works at least 16 hours and the other perhaps 14 hours. I am slightly concerned that it is easier for a two-parent household to reach that 30-hour threshold by working together than it would be for a single person, as a couple could manage child-care arrangements so that one person worked while the other looked after the children, and they swapped over to complete the 30 hours. A lone parent might need to find child care for the full 30 hours. It would be easier for a two-parent household to mix and match, and they would find it far easier to achieve the hours. The Minister, by trying to equalise provisions for couples, may have inadvertently made life more difficult for lone parents who must work 30 hours.

Dawn Primarolo: No, this concerns a change in rules from those that applied to the working families tax credit, under which one of a couple—but not lone parents—had to work 30 hours. There is no change to the position of lone parents. They already have the advantageous position. The change in position helps two-parent households, and equalises the provisions. The circumstances about which the hon. Gentleman is concerned would not occur. The benefit that is being introduced is an improvement on the 30-hour rule for two-parent households.

James Clappison: I rise briefly to put a point to the Minister, who has been courteous in responding to so many interventions.
 I seek clarification from the Minister, as her response to my hon. Friend's question about the disincentive to couples to partner up was unclear to me. She addressed the circumstances in which people become lone parents. I want her to address what happens when a couple take the decision to form a joint household, because that is the subject that my hon. Friend raised. 
 The hon. Member for Northavon drew attention to the risks that are run in such circumstances as a result of the intermingling of the child tax credit and the working tax credit. I want the Minister to address the matter again, so that I can be clear about her position. 
 Subsection (6)(c) establishes that, as part of the working tax credit, a lone parent will receive an additional element for being a lone parent who has care of a child. In addition to that, under subsection (6)(b), if that lone parent takes a decision to form a household with somebody else, they will receive an element to reflect that they are part of a couple. The lone parent will gain that extra element for being a couple, because they will face the extra costs involved, but is it not the case that the single parent will lose the element that they received under subsection (6)(c)? They will no longer be receiving the element that they would have received in respect of their child. They will still have to bear the costs of the child, but they will not be getting the element to help them to afford to do so. 
 All of those elements are independent of the child tax credit: they are part of the working tax credit, and I want the Minister to explain why there is no disincentive.

Dawn Primarolo: I shall try once more, but my back hurts, because I have had to keep rising to my feet.
 The working tax credit needs to cover a single person who has no children and no disability; they will get the basic credit. The other area that needs to be covered is the question of who will get the extras—whatever they are. Lone parents, couples and individuals with disabilities will get extra, in recognition of their extra costs. For instance, a lone parent does not get a reduction on their rent, gas or electricity; there are certain costs that can be shared between people. 
 If a lone parent household were extended so that there were two parents—two adults in the household—the lone parent would lose the lone parent element but gain the couple element. As I suggested to the Committee, the variation is so tiny that it would not act as an incentive. If an individual were deciding whether to live with another person, they would not be greatly influenced by the marginal difference between lone and couple elements. 
 There are lone parent, couple and disability premiums that recognise extra costs. A person could not get them all: they could be a lone parent, or a couple, and have the disability premium, but they could not have lone parent, couple and disability premiums. 
 I am confident that the balance will not suddenly encourage families all over the country to decide that they should be lone parents, and if they thought about making that choice the position should certainly be explained. People would have to manipulate their households in a spectacular fashion to get more out of the system, and that will be revealed under later clauses on enforcement and the correctness of details and applications. 
 I hope that that clarifies the matter and that the hon. Gentleman feels slightly more at ease with the proposal. I understand his point: a dramatic change in household structure needs to be notified, because a second income might dramatically affect the household income and trigger a reassessment in the current year. There are several ways through the problem. The household may end up with more because of the way in which the system works, and because of the inter-relation of child credit and working tax credit. 
 Question put and agreed to. 
 Clause 11 ordered to stand part of the Bill.

Clause 12 - Child care element

Howard Flight: I beg to move amendment No. 33, in page 8, line 26, at end insert—
'(2A) The charges of a prescribed description under subsection (2) may include an amount to take account of the loss of earnings of a person or of the spouse or, in the case of an unmarried couple, of the partner of the person by whom a claim for working tax credit is made who does not take qualifying remunerative work in order to care for a child of a prescribed description for whom the person is responsible. 
 (2B) The amount of tax credit payable under subsection (2A) shall not exceed the maximum amount payable to a person in qualifying remunerative work'.

Howard Flight: The amendment is in related territory and proposes that the child care element should involve an allowance to take account of the loss of earnings of a partner or spouse who does not work but who looks after children. Such an element would not exceed the maximum payable to a person in qualifying remuneration.
 The amendment tackles the issue that we discussed in the previous amendment and in amendment No. 31. There are circumstances in which one spouse may not be able to work for reasons of travel, choice, qualifications and so forth.

Dawn Primarolo: I cannot say why the amendment would not work, only that it would not produce what the hon. Gentleman hoped for. He went straight to the principle that he wanted to explore: whether there should be compensation for a partner who stays at home caring for the children and does not enter the labour market. It used to be called wages for housework; I do not know what it would be called now.
 The Government appreciate and understand that some couples take the decision that one of them will forego paid employment to stay at home because they believe that that is best for their children, and we therefore make payment by other methods, in particular child benefit. It would completely undermine our intentions on work incentives to make compensation for those who stay at home. We oppose the transfer of allowances for the same reason. However, it is important to ensure that those couples receive some recognition. That could be done through the adult element and child benefit, which, I remind the hon. Gentleman, the Government have increased 
 by 26 per cent, as well as other arrangements. The new tax credits build generously on the working families tax credit. The Government are not prepared to concede this principle. I ask my hon. Friends to oppose the amendment, as it is an inappropriate way of recognising the costs on families, and would require expenditure that we are not prepared to commit ourselves to at this stage. 
 Amendment negatived.

Karen Buck: I beg to move amendment No. 87, in page 8, line 27, after 'provided', insert
'whether in the child's home or elsewhere'.
 The argument has been well rehearsed. I raised this issue when we discussed the working families tax credit on Second Reading. It extends entitlement to the child care component of the tax credit to the provision of child care in the person's own home. There are two clusters of beneficiaries. The first are children with special needs and disabilities. I am grateful to Mencap for its briefing on this. It is concerned about children who need specialist care that is not closely accessible, such as in a special nursery that is not nearby, or care that is provided by a specialist carer in the home. Parents of such children are not currently entitled to draw down the child care component of the credit. 
 Mencap gives a helpful example of 
''a working mother, Sue Knight who has a 5-year-old son, with multiple disabilities and is tube fed. In the holidays, he needs someone from a registered agency to come into the house to look after him because he needs higher levels of support than child minders. The Inland Revenue rejected her childcare expenses as part of her Working Families Tax Credit claim. The letter from the Inland Revenue makes it clear that they would pay if her son could leave the house and go to a childminder or a club.''
 That was not possible because of his disability and the intense support he required. That case illustrates perfectly the point. I will not add any more. 
 The second group of potential beneficiaries are those who work antisocial hours. As a parent of a young child I recognise that parents who work from 3 pm to 8 pm are reluctant to move their child from child care in the evening, even assuming that such child care is available. That is a strong disincentive to people taking work.

James Clappison: I am listening to the hon. Lady with great interest. Obviously she has received briefings from a number of organisations. Can she give us an idea of the number of people who work antisocial hours?

Karen Buck: I cannot give a figure. Among other things, we are talking about a potential group of beneficiaries. We simply do not know who could be drawn into the work force. Representing a constituency in the inner city, I know that the jobs that are increasingly available and that may suit working parents or parents wanting to move into the work place are early evening shifts at supermarkets and shops. The number of potential beneficiaries is substantial. There is a strong argument for the amendment. The issue is about accreditation and paying for child care that is of suitable quality and
 consistent with accredited child care through nurseries and child minders.

Dawn Primarolo: The regulations need to be determined by the Department of Education and Skills. The Chancellor made it clear in the Budget last year that we wanted to ensure that disabled children could be cared for in their own home, but that the provision would apply to other jobs, too. We are working closely with the Secretary of State for Education and Skills. I hope that my hon. Friend will withdraw her amendment.

Karen Buck: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 It being after Five o'clock, The Chairman proceeded, pursuant to Sessional Order D [10 December 2001] and the Order of the Committee [15 January 2002], to put forthwith the Questions necessary to dispose of the business to be concluded at that time. 
 Question put, That clauses 12 to 22 stand part of the Bill:—
The Committee divided: Ayes 9, Noes 5.

Question accordingly agreed to. 
 Clauses 12 to 22 ordered to stand part of the Bill. 
 Further consideration adjourned.—[Mr. Sutcliffe.] 
 Adjourned accordingly at two minutes past Five o'clock till Tuesday 22 January at half-past Nine o'clock.